The Corrupt Public Servants (Forfeiture Of Property Bill)

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Law Commission Report

The Corrupt Public Servants (Forfeiture Of Property Bill)

»

LAW COMMISSION OF INDIA

ONE HUNDRED SIXTY SIXTH REPORT

ON

THE CORRUPT PUBLIC SERVANTS (FORPEITURE

OF PROPERTY) 8111

- FEBRUARY, 199?



[AW COMMISSION OF INDIA
SHASTRlBHNW%N
NEW DELHI -110 001
TEL.:3384475

Readencez
1,JANPATH
NEW DELHI - 110 011
TEL.:30l9465

D.O.No.6(3)(52)/98-LC(LS) Dated: 4.2.99

JUSIF-{DE
B.EdEEVANREDDY
Chairman, Law Commission of India

 

Dear Dr. M. Thambi Durai,

I am sending herewith 165th report on "The
Corrupt Pub} 11

ic Servants (Farfeiture of Property) B1

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INDEX

SUBJECT

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PAGE

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10



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1.1. The Backaround:- In a judgment delivered on May
8, 1936 (reported in the Qelbi Deveiopment Authority v.
Skipper Construction Co. LR) Ltd. AIR 1996 Supreme
,, the Supreme Court had made the foiiowihg

observations --

... a law providing or forfeiture of

properties ac'uired by hoiders of 'puo1ic office'

(inciudihg the offices/posts in the pupiic sector

-_,

corporations) by indulging in corrupt and iiiegai

acts and dea15_ 15 a rpving ﬁOFD<Q7ty in the
- I . . _ . _-

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£_ll  % |_r_1l__l: I)! ()'_l' .':l_D|_ !|:'|_V I III-:  Illl_J': I_.

:cquired in the orme on the hoider u- snru
prbperty but nigg to prQ_er,ie5 heid in the names
_L l..'_ ..__ _-- -l_ _ ._ _ _ .._'l..A.- .._ ---J
:_:g lll'« :l_I4._H_]':\t:|' c [I]-1l_|1I-Q] K)! zn_hr--y l|;lIr:1I_|\l|-_": glut
associates. Once -t is proved that the hnider wt
Cu): 1': Cuf'u:'Iu:E 'v'\aS .|l')ljI_j';gI-Eij '1r'| z:;1:)i'i'i_Jl'_'nt 5112115, E111:
such properties shouid be attached forthwith.

The iaw ehou1d place the burden of proving that

the attached ptoperties were hot acquired with

the :id of ronies/properties r~«eiv~d in the
course of corrupt deais upon the hoider of that

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III
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III I l\) I aiready been upheTd by this Court_ in th III aforesaid decision of th Ito .4.

I iarger Constitut -n Bench. Such a iaw has become an absoiute necessity, if the canker of corruption is no. t 'J prove the death-kneii of this nation. According to severe} perceptive observers, indeed, it has already reaoheu near--fata1 dimensions. It is ﬂ the Pariiament to act in this matter

-4.

) .¢. Th ID Genesis OF The Report:- Based u-on the observations made in and the iaw -ec1are« in the said judgment the Law Commission had prepared a Working Paper bar and other organisations and bodies interested in pupiic good. The Law Commission has received a iaoge ugmber 0. responses FFQW a wide gpectrum of society 1:121:11: [1 I F; 1 'F13 SE4 V 0-} Fa.' Sl_1'ggI-E-St. '1 01-15 .«_'-'afuj 1:. t:uﬁ'Iﬁ'p_-'_4i'|tS ' {-11 1: 1:» i. "xvi": i 1: '1':

have been taken inte-account in preparing this Report 1 3 Qeieterious Effect OF Corruption:-- 'One of the essentiai requirements of good governance is the absence of corruption. But unfortunateiy, corruption has strut deep-roots in our society, inoiuding its administrative jpparatus, At everv (HMO of the administration, whether at the Centre or in the States, there are corrupt eiements who are causing immense ioss to the state, to the nation and the pubiic interest, The adminigtrative apparatus of Tocai authorities, pubiic-sector corporations and Government companies has become eduaiiy bad. wien a pubiic servant is paid bribe of, say, a iakh of rupees, it is paid for the reason that the payer gets at ieast 10 times the Jenefit, if " more, and that

--,-I cl U' m 3 m 'h

-.I if is the ioss Jf rf he State and the peopie. It is JU4 so much the ;mount of the bribe but the quantum of ioss to the peoile and the morai degradation it involves, th:t is rore relevant. There is no respect for pubiic money and public funds in the minds of many in the I1] I:

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--l ..J. ('J T '< I I ':':" is nobody'; roney. For a sﬁa11 peistnai benefit, the corrupt are prepared to cause any arount on ioss to the State and to the peopie. On r_71_(:1:.«:ii_jjy'g'i:, Q]: 1 1'; 'fl grit 'I Cuﬂ' 'n__ﬁJv (Inf: |'_i'|e' we': 'F5 F9 5:: 'v'h'_--'v"no§§ nnciuding schemes nor advancement of scheduied tribes and other weaker sections are not abie to achieve the intended resuits. In »act, a former Crime Minister had observed once that ouiy about -6% of cne funds meant on ' 0 the weifare of the scheduied tribes rearhei them and that ._he rer',3i hi mg 8495 ajsgrigeij ._.-3 ._'n..;- 'ienj_..5-rs of '.;'n.:_. E1_Iji's'u':v'I'u~3t';'at.'gvI':'- Ev_f_'I}'_I:_'{'E1t.I_;.'3, pm"; 'p :_'1::': :1':-3 §'1_I'uj Ijxthng-P' ﬁiddiemen. A stage has arrived where the ctrruption is threatening the very security and safety of the State. There is corruption in execution of projects, in awarding contracts, in making purchases, in issuance of iicences and permits, in appointments, in eiections and so on and so forth. There is hardly any sphere of iife ieft untouched by corruption in our societv. Surnrisinoiv - , F - , k...'.a,A or rather shocking1y - the cerrupt e1emente have lost ail sense of shame and gui1t. The eecieta1 sanctien is practically nil. The cerrupt e1emen.e are brazeniy flaunting their i11--gotton wea1th. The amounts invoived in eerruptien are quite often aetrenemicai. These are numereus foreign forces out ta deetabiiiee eur country and undermine our economy and the corrupt eiements in our governing structure are the willing to piay their gem in for their personal gain. Thus corruption in our ceuhtry today is not eniy immerai and ehemefui, it has a} betcﬁe :hti--hatienaI and anti-eociai and tierefere requires tn be deait with an iron head. The Preveneinn of Corruption Act has tetaiiy faiied in checking the corruption. LU spite ~- the Fact that Lﬁd7a is rrted as one nu the Fret corrupt countries in the werid, the r\1HT1bI-E 1' {FF :ir'<:\a_'-_.tf_-(:.l_;'i:_ '1 Qﬁﬁ - /_'-'1!'u'_' v'yn:n'Ea 31:: I 'n- "I'll n'I"|tIv:-I' OF cehvictiehe under the said &ct-ere ridiculously «ow. u Corrupt minister or a corrupt top pubiic servant is even- u iie being prosecuted, the ereeecutiun herdiy ever reaches tenciueion. At every stage, there wiii be revisiene and writ: te etaii and defeat the prosecution, Top iawyere are engaged. Some or other Duiﬁt is raised

- g:

and the 3itigatieh'geee en eneieeeiyb thus defeating the I I |_n-A l:Ibjel:t1VE- {VF thI-_- 1: ('1 F31'; ﬁa-E }--_)i'-(':\¥.:0El:1'|:J|:._;\:\l--l \_':j'1_fs:njr't.i_)i').ﬁt.E1_ 'v' the C.cu_u*i;.,< in-an have r.r:n1.:- fr. fi':u'ii run.-.2. _ag - ..,_._ .-._ .,_...... -.. ----__- - _ sanctity to prjcedure forgetting the prihcipie underiying ,1973, viz., any and every infraction of procedurai provision does not vitiate the fina1 order passed and that oniy that vioiation which causes prejudic III ma '3!' constitute a ground for disturbing h rf III final order passed. Indeed it must be said that criminai judioiai system in this country has proved tota11y ineffective particuiariy against the rich, the infiuentiai and the U

-I .2 It ~_£.

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._I III II» "h 'h ective, if at a11, oniy against th c e pooc, the destitute Tﬂd the undefended. we do not, howeve-, think it necessary to stres: any further the .e _nd pernicious roie of corruption in our body po1itic as it is an obvious and indisputabie Fact. _ - f\.C '!'|._ -_ _ - -,. .- -_ .-.. __._ 1.4. L!!c1'j':".}'J*1' V U' H": Ex 9:71 IHU Law And Ti!-: P! '_'.C"_'b'-_"j O __ _ __ ..'ﬁ __ _'_, - _ «Viv:-r_'1~'~|1v'n--3 Tm 1-144K]?-3 Tin: EV1I \f_'l__|'[i_"'_-|'|:.|(_H-\:"' IS I_ru_jn:-

Ll._J. ...u__ 1-... ..-4..'_.. _: r\_._-....a..-_.- A 4. Jnnrs ___ .4... t.. |.j|ﬁ|J by": pay o:Vo_--_-gild g«_»gg :__n \_.4_n_i i l_gl_n_' |«_ng| HI_ |_.' n:sr_sr_\ Lu l_1V |l_|O-3': II_Iv .

. '___L.__- _C __.-_&__. -.£'_ l_'l__ __- __.L. . . I . ..l. _.a -- «mn n~:x_..;v_o_. ll-|ll I_)g c1~_~~:o:I_.~: I_>I 1_vl_!§_II il- :3:-:1 v¢uu_ wru l(_.!l ,»_«r of In .

.____ _ --._ I .1 ---..-_.._ -_-.._.._ ,_ _.,__ _._ -_ ._- 9:-Vx_l_v:-:5 n_)f' inc: yxvuiwm .:_~(_n_;f1_:+:».~_« «xi gru_u_ug_rg i:n_g'n; ~_~Lu_.}| 'f"u_rv'::o-_-I'-:.|_uo-_- l_z_'«'Iv'I I t_mu-'_u_ Ev_tu:I|_It «H11 v afta-EV' n_.i'|e :H_l,'_'I1'I1: Ss§t"vEH'I'i:. -|'\ 1'ml'u\/'Ic'_"t.ecj or the Feievant offence [section u3(i)(e)« under the A.j'.;_ Thcare 'IQ aim: in \_/Qgi_.'e a pre---iruj.---per.¢;ieg1«j.;- 'Saw 1,9, , Cririnai Law Amendment Ordinance 38 of 1944 which provides For attachment of properties of a nubiic servant who is accused of corruption. But, here again, the confiscation can come about oniy pursuant to and on the basis of conviction for corruption. Simiiar is the ,'_1Q.~3 1 i_i1ijn1 I_|['ujo§-0' the p"-'rev:-;-ni; 10:1 in' the .'v'gu_._r1.:v l_a_t_niuje«' 1.1g _1n7, 1398 idtroduced in -he Dariuament receutiy. The Bi11 defines the expression "money-iaundering" to mean owning, possessing or otherwise deaiing in the "proceeds «f the crime , and confiscation of proceeds of crime is ptssipie oniy after a person is convicted of one or the other offence mentioned in the S.he CA.

uie _to the Bi11.

Part V Lf the Scheduie mentions some of the offences created/recognised by the Prevention of Corruption Act, but quite significantiy the offence of possessicn of disproportionate assets (deait with under ciause (e) rf 5up--secdion (1) of section 13) is not one of the rffennes rentioned in the Scheduie. Perhaps, the s:id offence did not fit into the scheme of the Ei11. Be that as it nay the fact rerains that there is no law in force in this country providing for forfeiture/confiscation of the iii--gotten rssess/properties of the hoiders of pupiir II:

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an o _J) .I> "H 31 .< D K .9?

hoiders on pupiic office LU jaii is no remedy; it is no ~3.:H._.i;iQr-1 Ti; «jg»;-~:.n'i:. re;-:11}: hurt then. I_ln1e§~3 the . r 11 -gotten assets are forfeited L" the State, the canker of corruption cannot be reaiiy tackied. Hence, the . _ . _ . _ _.'.a...

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1.5. The Proposed Approach Recnanised In The SAFEMA:

.I_ {II a r:tter of fact, this approach was recognised by Pariiament more than twenty yezrs ago in the case of smuggiers and vioiaters of foreign exchange iawg, when it "i"

, enacted the Smugglers and Foreign Exchange Manipuiators ~ (Forfeiture of Property) Act 1976 (SAFEMA). The preamble to the Act reads --

"An Act to provide for the forfeiture of iiiegaiiy acquired properties of smugglers and foreign exchange manipuiators and for matter:

connected the'ewith or incidentai thereto. Whereas -or the effective prevention of smugg1ing activities and foreign exchange manipuiations which are'having a deieterions effect on the n:tion:i economy it is necess:ry to deprive persons engaged in surh activities and mahipuiations of their iii-gotten gains;

And whereas such persons have JEEW augmenting surh gains by violations of weaith--tax inoome--tax or no1ding the properties acquired by them through su-u grins in the names on their reiatives Be it enacted by Par1iament in the Twenty-sixth Year of tie Reoub1ic of India as fo11ow :"

m (It may be mentioned that e11 the factors -- and many more -- mentioned in the said Preamb1e are present to a much greater degree in the ease of corrupt ho1ders of bub1ic office.) persons detained under the Conservation mt Fureigh Exchange and Prevention of Smugg1ing Activities Act 1974 (CGFEPuSA) and where such order has not been revoked on the reoort of the Advisorv award "I has not been quashed under COFEFOSA is neither 4 tonuirtion one is it : proof .3,' gay.'-t., it being nis--4r»g-1y H llfl-3\/'$E!'It1\/El HIE-EvSl_J_i'@_-.'i Th»:-

exoression 'ii1ega11y acquired property' is very significant and deserves to be set out in fuli:

"(cu "i11eg:11y acquired property", in re1ation tn any persons to whom this Act applies means -

ii) any property acquire: by such persons, whether before or after the comnehcement of this Act whH71v HF Daftiv MU? HF Hf hv means 55 Bﬁy income, earnings or assets derived or obtained from or :ttributaJ1e to tny Cetivity prohibited by or under any 1aw for the time being in force re1ating to any matter in respec. of which Pariiament has power to make 1aws; or

(ii) any property acquired by such person, whether befute or after the commencement of this Act, who11y or partiy out of or by means of any income earniigs or assets in renpect of which any such iaw has been contravened; or

(iii) any prope'ty acquired by such persons whether before or after the commencemert of this

- ..-_'I'7.. --,_ ___ .. - . _ _.- .- -_-.«--- -C -.-..

AI_:'C-, will my '.1! Lraiitiy «_»l_aI'_. of or by !'II+:'».1u: r_»- :''_!')I income, earnings or assets the source of which cannot be proved and which cannot be shrwn to be 5ttV7JUt&J19 LU any act HF thing done in respect on any matter in reiation LU which Pariianent has no power to make iaws; or

(iv) tny property acquired by such person, whether before or after the commencement of this Act, for a consideration, or by any means, whoiiy or 'iart1y traceable to any property referre CL 1'?

iii: nr .h: income or , _. H- .

earnings from such property-

-10- (A) any property he1d by such person which wouid have been in reiation to any previous ho1der tiereof, i11ega11y acquired property under this clause if such previous hoider had not ceased to ioid it, uniess such person or any other person who heid the property at any time after such previous ioider or, where there are two or Wore such p'evious holders, the Iast of such previous Jaders is or was a tr'nsferee in good faith for before or afte: the commencement of this Act, -or A considerction, or by aﬂy me:ns, whoiiy -n ruart';v tv'a«:ea_b'«e tn arm |:)r'<'il"n-'av"i'v 'r'.21'u'.no um.-_{.;-r I' J ' 4 --r-- -4 ' u item (A1, or the income or earnings therefrom property be not In other wovds, the burden of proving the iawfun acquisition of such properties is pieced upon him i e -11- the holder of such properties, evidently for the reason that is alone should know how has he come to hold or possess the said properties (section 8). It is equally relevant to notice that the Act extends not only to the persons convicted under specified crimes and those detaineu under CQFEPOSA, who ar e found in possession of illegally acquired properties but extends to their relatives and associates as well. The expressitn relative takes in not only wife but all near (section 2). when the ccistitutionality n» the srid enactment was chrllenged on the grounds of being unjust, éYCESSlVE and h:rsh, a Nine-Judge Constitution Bench of the Supreme Pouri unanimously rejected the rhallenge in the Attorney General nu India v Anratlal Prajivandas [1994 (5) SCC 5A3_It was explained by the Supreme Court that the idea underlying the Ant is "to forfeit the » egalay acouired properties of uhe convict/detenue irrespective of the fact that such properties are held by H. kept in the name o- or screened in the name of any relative or associate as UEflHHd in the said two Ex'iaﬁ8tlOﬁS. The idea is not tL forfeit the independent tn h-m wherever they are, ignoring all the transactions withngespect to those properties;" It was held bv the Supreme Court that the definition of the expression 'illeg:lly acouire- property" is not arpitrarv or 4 -12- over-inclusive and that having regard to the seriousness of the evi1 sought to be curbed, the Taw had to be made strict. In other words, the 1aw must be eduai to the mischief sought to be remedied. An insufficient and inadequate iaw is no 1aw at a11. The foiiowing observations are relevant:

... we see io substance in the submission that tie efinition is arbitrary or discriminatory nor do we see any reason for 'eading down the s A I W .4 definition to confine it to the yioiatirf o tr we c:n take note of the fact tn:t persons engaged in 5mI_.gg'.irug anuj fur:-10;. ejxgiiaiige _riia_9'\i_r_ii_P.5_i;.1«jm~3 gm HQL keeﬁ Feggiff aﬂd Efﬁpef ggtmuﬁtﬁ with .'95i'_'..;-(gt, ._u ~.u« h axjtivity Hr '1t~'_; iru:r_'u"e or (ii tiie :ssets :oouired therefrom. If such person exchange Taws and iaws reiating In ~*D~F* and import necessariiv invoives vioiation of L3' 1aws. Indeed, it is well known fact th-t over vioiation, tax evasion, drugs and orime have a1} got mixed--uo. Evasion of taxes is integrai to such activity. It would be diffiouit for any authority to say, in the absence of any accounts 0! oth.r zeieyant materiai that among the III properties acquired by smuggier, which of them or which portions of them are attributab1e to smuse1in9 exchange vioiations and and foreign which properties or which portions thereof are attributab1e to vioiations the Pariiament has the power probabiy for this reason that of proving that the properties specified in cause nc ice are not i1Teaa11y acquire- pr»perties is piaced upon the person concerned. medicine. In Ttw it is not possibie to say thrt defininion c\ arbitrary we is couched in iii'ui'ea5«:»oi5'31 >/ wi-je tag-_rrn~3 _ , , 'g T'_r'u-- \:'.i:)fr'u:.E-i'_'»t Oi: ' 3-__IIl_I1I 'I E-uj Tr'i_n§'i:,' Fun Q Ev'E-»_'1_«:fr'i O7-'- Trust' On The Far; Of Bribe Takers -- More important, «h' Constitution Bench evniveo the concept on 'impTied trust' and brea .C_1'I_..-_ IUIHJWIH said concept:

}> "f:

ff '[1 'T iiiegaiiy acquire-

properties are ecrned and acquired in _. - W1)':

iiiegal aﬁd corrupt - at the cost of the peopie :nd the state. The State is deprived nu its iegitimate revenue L" that extent. These properties most jostiy gm back where they beiong -14-

- to the State. "what we are saying is nothing new or hereticai. witness the facts and ratio of a recent decision of the Privy Counoii in L0 Attorney Genegai for Hong Kong v. Reid. [19 3 (3) W.L.R. 1143]. The Respondent, Reid, was a orown--prosecutor in Hong Kong. He took bribes as an inducement to suppress certain oriminal prosecutions and with those monies, aoouireu properties in New Zeaiand, two of which were heid in the name of himseif and his wife and the third in the name of his soiioitor. He was found guiity of the offence of bribe--taking and sentenced by a oriminai court. The administration of Hong Kong oiaimed tha- the said properties in New Zeaiand were held »y the owners theveof as constructive trustees For the Crown __A _. -4- L... __ _. - _ 1-- r\-_.'. V'V__ r'\--

CHILI HLI: L L": llv'_".d"_" ''V':' '.4.' LII': Li '.'W!' "'*:' "' '-/'V C«:iI_n'u: 'I I n_J_ij'v'go-31 xj x_.i'I'i 5 I: 1 5 Tu, l:)-\I'|-__5:V-':V-i_l:'|.|1_I':'_J ':'r'n§ New Zeaiand Court of Appeais ir» Tempienan, teiivering the opinion of the Judiciai Cnmrittee based his oonoiusion mm the simpie gznund that any benefit obtained by a fiduciary through a blHaLh mi duty belongs in equity tn the beneficiar,. Lt is heid that a gift accepted by a person in a fiducitry positirn as an incentive inr his breach of dutv constituted a hribe, and, ,. ;.u-_.._n- .'.-

czi uiu.n_ign HI equity he not oniy becam III .1| L1 II! D"

I'?

O 'n '*1 3 'I the amount

-15-.

of the bribe to the person to whom the duty was owed but he also held the bribe and any property acquired therewith on constructive trust for that person. It is held further that if the value of the property representing the bribe depreciated, the fiduciary had to pay to the injured person the difference between that value and the initial amdunt of the bribe, and if tie property increased in value the fiduciary was nod entitled to retsin the excess since equity would not allow him to make any profit from his breach of duty Accordingly, it is held thrt to the extent that they represented brihe received bv the first respondent, the New Zealrnd proper_ies were held in trU:- for the Frown and the Crown had an 5-qi_;i._a_ble ir»._ere§_.._. i;'ne;rein True lg-jrrued Law i-jarri (:I:_"i~'_4t':'_-i"\/E-1:1 \I_Jr't}'H-E-r' ':1: the :Jho--t"if'v ('FF constructive trust is not applied and properties interdicted when available, the properties "«an be sold and the proceeds whisked awry to sons Shangri La which hides bribes and other cofrupt moneys in numbered bank accounts 4 to which we .3r'E- teﬁlpted l_l) aujujj Cu'IE- (:40? i_!|'ujo§-r'§t,3_l"n'_i tilti- imnorality of the B:nkers who raintained numbered accounts but it is difficult to understand the ziorality of the Governments ind their laws whiri sanction such practices -- in effect encouraaino I :7 E:

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where a person acquires properties by vioiating the iaw and at the expense of and to the detriment of the State and its revenues where an enactment provides for such a course. even if the fiduciary 'eiationship referred to in Reid is not present. It may be seen that the concept empioyed in Reid was a common iaw concept wherea: here is a case of an 1.1?! xpres III In C9' 11' ff C L'?

'..

'i ~< provision providing for such forfeiture. May we say in conciusion that "the interests of society are paramount to individuai interests and the twr must be brought into just and harmoni-:~us reiation. A mere property career is not the final destiny of mankind, if progress is to be the law on the future :s it has been "I the past (Lewis Henry Morgan , Ancient Societv) "

1.8 Reiteration Of The Afﬁresaid Concept - The aforesaid idea was reiterrted by the SHp"eme Court in a irter decision rendered in 1996, Deihi Deveiopment Authoritv v. Skipper Construction Co. (P) Ltd. -17- 1.9. some Salient Features Of The Proposed Bill:- The Law Commission of India has kept the aforementioned facts _.a-.

and law while drafting the accompanying Bill (Annexure-Al. with a view to enable the Competent Authority under the Act to obtain information with III spect to the illegally acquired properties and asse of corrupt public servants (which expression includes Ministers and Members of Parliament, both incumbent_ and former) whether located in India or stashed abroad, the very holding of or possession of illegally acouired ptoperties is ride :n offence. Declaring such ho ding or possession illegal and a punishable o fence warrants their forfeiture and taking of step. . " .' g and /1 F'?

__I

-.

CL III 3 .-r ..4

-h < «em even when they are kept in numbered accounts Au_1ority to call upon any public servant -elieved to be !H possession on illeg:lly acquired properties, wiether within India or abroad, tn disclose JY way of an afficavit the partirulars of the assets ie d/possessed by to disclose infornrtion with respect to a person to when this Act tpplies and such person is made bound to furnish such informrtion Refusal to furnish inforration un furnishing false information is made punishable. Certain relevant powers of the Civil Pnuvt are :lso vested in the Competent Authority L" enable him to function effectively. For the same purpose it is also clothed with the power to attach properties pending the proceedings under the Act, to order any enquiry, investigation, search and seizure through such authorities as he may find appropriate and also to call LIDCIFI E'i.i'I'y' 8.i.It'I'I¢.'.b'r'l'IL)I' 'I2'! render -'UIL"r'I 'E~SlStai'iC Ill its as may it be called upon to render. In short, all provisions necessary for an effective and unhindered functioning o the Competent Authority have been provided for The accompanying Bil injunction again _cn a piovision cannot bar the High Court interfering under Article 226 of the Constitution of Indi: -- or, for that Tatter, the Supreme Cour under Articles 32 or 136 -- out as iuld by a nine-Judge Ponstitution Bench of the Supreme COHIL in Mafatir' Industries Ltd v. Hninn of India (1997 (5) SCC S361 derling with a Slﬁllaf provision in the Central Ex'ise m' < < _J 'T «if C III :1 *'h I/I wub-section (R) to section 11- ID CI 'h the Central Excises and Salt Act, as amended by the aforesaid Amendment Act, and by.virtue of the pruvisinns contained ln sup-section '33 ~- sec_ion 27 of the Customs Art, 1962, as amended (EXLEDtTHG those whirh arise as a result of ljt:-'l.-If-![-;1_'|-1()(| ('if iji""""""" " """"' ": "

__ __ __ _ _, _ ]t_.i_igi.~:I_,ii_1_.]i_'|i_ivy_||i_v l_)| 3 pviivialcigi

-18..

whereunder the- Ievy was created) have to be preferred and adjudicated oniy under the provisions of the respective enactments. No suit for refund of duty is maintainabie in that behaif. So far as the jurisdiction of the High Courts under Articie 226 of the Constitution - or I of this Court under Articie 32 - is concerned, it remcins ?unaffected by the provisions of the Act. Even so; the Court wouid, while exercising the jurisdiction under the said articies, have due regard to the iegisiative intent matifested by the provisions of the Act. The writ petition wouid naturaliy be considered and dispose- of in the iighf of and in accordance with the provisions on section 11-5. This is for the reason that the ptwer under Article 228 has ta be exerrised to effectufte the regine of iaw and no- for abrogating it, Even whiie acting in exercise H! the said constitutionai power, the High Court «annot ignore the Taw nor can it override it. The power under Article 226 is conceived to serve the ends of itw and not to transgress them." 1.3.1. so far as the definition of "reiatives" and "associates" is concerned, they have been otdiiy Titted from SAFEMA. Even the definition of "iiiegaiiy acquired nroperty" is substantiaiiy based upon the definition in the said Act. Indeed, the very Biii 'accompanying this -20- Report is patterned on SAFEHA. This has been done advisediy for the reason that the oonstitutionai vaiidity of SAFEMA has aifeady been tested and affirmed by ' d larger Constitution Bench of Nine Tearned Judges of the Sup'eme Court of India in Attorney Genera} of India V. Amritiai Prajivandas, referred to supra. The idea has been to avoid time-eonsLﬁing 1itigation in courts on the

-._. _---.._ A.l-_. -A------,--'1 -- I-- _I_.'..- - -- 1-- ugntugnuug Lngt um ﬁm|]uIbg| pgyty n_d Qudggtgd gm tn:

_--__ _- --_ "---- --- _ _ - _ _ _~ ;-- -1 nnummﬁ uvxhu meg:Urg mt ﬁg AHV Hf 1f\ Urﬂv1§ImnQ, ﬂhnv

----- r--- 1 .4 ' 1 * -- r--- '- - - ' .'

--__ -- u- _- -1 ___ _ _ . . . _ _ _ -4 _ -____- _ _ 91::-den- Hf ﬁne J;nta Don Ha: guvw :pEL!fl| uumuentr U5 __ ___ _ _. -- -2 _- _ o _ _ _ __ _ _ _ ;__ -- H a Hnvfv on guﬁvgyu gt Thu nimvmxud iwd aiannmn ma

1. ,_- _, _.._ ,-.- ___- __, _ -- - .-

_J__ Huger -

H u ---4 5-- u- ___ _ ___ __ _ _-___ _ THH negu nmr tug 1ge1§1gtIQm I: wgui ggtu tgd by ,1: 7n. __-_--_4 1- :-w,-:__ «. .._ _- d!!. IHE prupwaeu !§gl:!dL*UH may ?EHU"E .enbers of the Union Council of Mirf

-_ ..-_ ---- - 7

- ---. -I>_~"-L-:-": «:1: WI:-II

-_ .. .C' "V- l----- - --. -------- --. - ------ -- .-_J or Mp\ Eu lone tuear statement: of Asrete anu 'iabiiities as aiso of their reiatives and The teyt relatives and associates defined in exp.an:tion 1 and 2 in Section z of the 811:

ap_ears adequate "

-21..

1.11. Measures To Combat 'Corruption By OECD And 1,'?

.-I L'?

'3 0 I'?

U' II Countries And Need For stringent Measures:- Le assumed that the Indian people are tolerant of corruption. People's failure to participate in elections in desireu iumbers is a testimony to their lack of frith in the instruments of governance. People's patience m:y be shortlived. Many governments viz., Brazil, Indonesia, Italy, Pakistan and Zaire have fallen % \ tape, less investment in education, less direct oreign t have attracted worldwide attention The United Strtes of America enacted Foreign Corrupt Practices Act several years back. Recently, international financial institutions such as the World Benn and IMF have increasingly started linking aid to the developing L l_'+ An rnti-bribery convention has also ueen signed/ratifiec by scne 29 members of the OECD wnich requires them to mike it a crime to bribe :ny foreign otficicl to win or .he convention is soon expected to come into force. A few multinational companies are understood to be strictly enforcing their ethics code not to bribe officicls. It

-22..

independent and fearless judiciary in India can go a long way in playing an important role in ensuring that the corrupt are not spared at any cost. Nevertheless, it is not a substitute for clean and responsive government which has the good of people at heart and which is earnest in the task of routing out corruption. Let war on co'ruption not remtin a mere slogan. It is in this earnest hope that the government of the day means business that the Law Commission has ventured tL propose i t 1.12. New Legislation Recommended:- The Law Ctmmission hopes and trusts that the government would take immediate steps .3r introducing legislation in terms of the accompanying Bill §Annexure--A} fﬁd hive it passed. Such a legislation would arm the State with an effective and powerful weapon to fight corruption whici is sapping the fundamentals of our society and is posing a serious thieat to our economy and to the security and integrity (MR.JUSTICE B.P.JEEVAN REDDY) (RETD.)

- {JP "4 Z CHAIRlvl.A:'~l hr 6 , (MB.JUSTICE LEILA SETH) (RETD.) (DR.N.M.GHATATE) EBUBHASH C.JAIN) MEMBER MEMBER MEMBER SECRETARY (ANNEXURE-A1 THE CORRUPT PUBLIC SERVANT5 (FORFEITURE OF PROPERTY) BILL An Act to provide for the forfeiture of i11eaa11y acquired properties of corrupt pubiic servants and for matters connected therewith or incidentai thereto.

1- pupiic servants whici is having a de1ete' tious and 6 deadening effect on administrative efficiency, deveiopmentai activities and programmes and is State, it is necessary tn devise .effe«five and prompt neasures to deprive persons engtged in such rctivities of AND WHEREAS many such pubiic servants are stashing away their iii-9QttOﬁ gains in iumbered accounts in foreign banks and -n many other ways outside the territory on Indi: and whereas it is necessary to identify "and seize those assets for being utiiised for public purposes and whereas it is necessary for achieving the said purpose to declare the very holding or possession of iiiegaiiy acquired properties an offence;

-24-

AND WHEREAS prosecution of corrupt pubiic servants under the provisions of the Indian Penai Code, 1860 and th mt:

Prevention of Corruption Act, 1963 has become difficuit on account of various systemic defects and as a resuit of which the iumber of prosecutions and more so the number of convictions of corrupt pubiic servants is ridicuiousiy low compared to the widespread corruption pervading every 1eve1 of administration;

AND WHEREAS such pubiic servants have been augmenting such gains by vioiatiohs of wealth Tax, Income Tax and Q other Taws or by other means an have thereby been increasing their resources for operating in a ciahdestine manner;

AND WHEREAS such persons have in many cases been hoiding name of their re1atives, as:ociates and «on-idants; and whereas it is necessary to forfeit aii such properties devices and transactions;

BE it enacted by Pariiament in the Forty-ninth Year of the Reﬁubiic o ;nd1a as foi1ows' L Sectioh 1' Short titie, extent and commehceﬁeht (-) This A«t may be calied the Corrupt Fubiic :25- (2) It extends to tie whoie of India. (3) It sha11 come into force on such day as may be specified by the Centrai Government in the Officiai Gazette but such day sha11 not be iater than three months from the day on which the President accords his assent to [I thi« measure.

3-E-Cz'-1-'ICU': 2 ' I 2 ' 9 (4) The provisions of this Act sha11 appiy only to the dersons specified in sup--section (2). (2) The ,ersons referred to in sud-seotion (1) are the foilowing, n:meiy:--

(a) everv pubiir servant-

(i) who has been found guiity of corruption in a discipiinary/departmentai enquiry or by a court or

(ii) who is hoiding or i III in possession of iiiegaiiy acqui'ed properties or

(iii) who is found holding or in possession of properties whether in the course of a search, raid or survey by an authority or in any other manner whatsoever, which are disproportionate to his known means of income' " Y \ -25-

("D every Werson who is a re1ative of the pubiip serv:nt referred to in c1ause (a); (C) every associate of tie pubiio servant referred to in ciause (a);

(d) any hnidet of any property which was at any time previousiy heid by the puuiuc servant referred to in cizose (ﬁg, nnvess such nuider proves that he was a i transferee in good frith -ur aderuate consideration; E-

ie) any person who has depositet any amounts or other __. _l_'!_ _ . . _ __._..._'__ .'.- _.-.. ,.._|, _- ..._.. -a.l-- -. - HIl_|Vr_1[_II|:| :_n( (_|'_n-_-1 |_. 50:->3 H] any tl_[|)-\_ ¢_)f _H>/ ¢_nI_.(yo-_-I (l_)[Il H: H «n_:T_..~3': uje '::.'r'u§ ﬁe!' F1, t(:H'y (jf II'uj'I [1, (H 'r':'_'$ F1: :11! u v's'-;-uj aﬁv _..-.A.--- .. 4.... _ .A.l_- .A.-'--..A. - T _l.'_. .LI.... 4. LI_. Ill IILII-:1 l_. I l|I_lI_.: ||_)l:l I_.[|O: l_.|-_'_'(l ||_,lIi V l)| _L[|lJ | r_1_ W I |_[)l_H_{|__. I_,_!|l:I i'»-':c:3i_j';S':t.Ea Dug-r'I'|'I'I.~3§'u4:)r'y Of the .'«_'1_f_'ni:|:v'u:II:n_i";E1_t.e r3|_jI'.}'It'rr"|T:.v 'in . . - - , '!'.__J_' ..

i.'!'_| !C'..

Exp1;h:tion--1: For the purposes of o1ause (b; o» this snn--section, "relrtive" in relation to a public servant an) of the duo}-C servant;

(ii) brother or sister of the pub?-c servant;

(iii) brother nr gieter H. the epguee of the pnh1.c SQVVEHE;

(iv) any 1.nea1 aggendaht mf descendant U. the puhiic ¢'\

v) any 11hea1 ascehdant or descendant of the spouse of the pHb1ic servant;

vi) spouse of the person 'eferred to in clause (15,, c1ause (iii), o1ause (iv) or o1ause (V); vi?) :ny 11nea1 descendant of the perstn referred tn Exp1anation--2: For the purposes of Clause id), a::oc1ate", in re1ation to a public servant means - é \ Q i; rny individua1 who had been or is re:1d1ng Tﬁ the residehtiai premises (1no1udihg outhouses) of _..-n- ..|_'I _ --_ -A..

>_~Lu---n D-.11.» I II.. :4:-v v -_nI_. , 1 1 any 'Iv'uj'I v1'«jI_ga] wfr;._-» hag; been CH" 15 'n5_n,3g'-ng the _:1.-_ -_ _ I . _ . . .- ;.a-- ..-__-..._;._ -1: ..'....v_ _.|_1.'- cI_| 4 _ I I : (ll Kb:'O:"_l lllbl I__.[!l: C1l_.l_.l_)l_](}l_"'_§ l_)| :l_|l_.(| I_'!_l| ll_. servant;

iii) ﬁﬂy Aﬁiﬂfiﬁtimn Q: pereens, undv Q: 1ﬂ;1v1duﬁ1§, pdFtﬁEFSh17 firm, nr private company w1th1n the pub1ic servant had been or 1s a Wember, partner my direQtQF' WV) aﬁy 1ﬁd1vidﬂa} wnm h&L beeﬂ mi 13 a WEMJQF, Qaftﬁef Hf difeﬁtﬁf Hf aﬂ a5SQC1ﬁt1Qﬁ Qf pwfguuﬁ, UQHV Q9 iﬂL1v1dUa}§ pﬁftﬁefﬁhiﬁ Fifm ml ﬁF1V&te f'\ < ) \./ -28- company referred to in c1ause (iii) at any time when such pub1ic servant had been or is a member, partner or di'ector of such association, body, partnership firm or private company; any persons who had been or managing the affairs, or keepin the accounts of an" association of » Y persons, body of individua1s, partnership firm or private company referred to in clause (iii); the trustee of any trust, where -- f.

(a) the trust has been created by such pubiic servant; or {b1 the value of the rssets contributed by such pubiic servant (inciuding the vtiue ~, if any, coitributed by him eariier) to the trust amounts, on the date on which the contribution is made, tn not Iess than twenty per cent of the vaiue of the assets of the trust on that s29-

(vii) where the competent authority, for reasons to be rectrded in writing, considers that anv J properties of such public servant are heid on his behaif by any other person, such other person. Expianation-3: For the avoidance of doubt, it is hereby provided that the question whether any person is a person to - whom the provisions of this Act appiy may be CL :1! L'?

It:

mined with reference to any facts, circumstances or events (inciuding any conviction or detention) which % 3 occurred or took place before the commencement of this Q Act.

Sectitn 3 Definitions (1) In this Act, uniess the context otherwise requires -

(a) "competent authority" means the competent authority rppointed under sub-section (1) rf Section 5 and sha11 inciude the competent ;uthorities designated as such under sub-section (2) of Section 5.

(b) "corruption" inciudes (i) conduct of the nature specified in any of the offences mentioned in the Pfevention of Corruption Act and the offences mentioned , 197, 217 "

489-A to 489--E of the Indian Penai code -30- such conduct as is inconsistent with the integrity a public servant is expected to possess and which causes or likely to cause loss or prejudice to the interest of the State or to the public interest, as the case may be.

(c) "illegally acquired property", in relation to any person to whom this act applies, means -

\i) any property acquired by such person whether before or after the commencement of this Act, wiolly or paitly out of or 6 by merns of any income, 'earnings or assets derived or obtained from or 'I' attridutable to any activity prohibited by or under any law for the time beino in force relating to anv matter in respect of which Parliament has power to mcke laws; or

(ii) any property acquired by such person whether before or after the commencement of this Act, wholly or partly out of or by mean: of any income, earnings or assets in respect of which any such law has been contravened; or

(iii) a'\ ~-4 -31- any property 'acquired by such person whether before or after the commencement of this Act, who11y or partiy out of or by means of any income, earnings or assets the source of which cannot be proved and which cannot be shown to be attributab1e to any act or thing dcie in respect of any matter in reiation to which Pariiament has io power to make iaws, or

5. any property acquired by such person, whether before or after the commencement of this Act, for a consideration, or by any means, who11y or partiy traceabie to any property referred to in sub-clauses

(i) tn (iii) or the income or earnings from such property-

any property held by or in possession of such person, whether before or after the commencement of this Act,' which is disproportionate to his krawn lawful sources of income or for which he cannot satisfactori1y account for:

(A) m '-4

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any property held by such person which would have been, in relation to any p'evious holder thereof, illegally acquired property under this clause if such previous holder had not ceased to hold it, unless such person or any other person who held the property at any time after such previous holder or, where there are two or more such previous the last of previous such 'elders is or was a transferee in good . . I faith for adequate consideration; property acquireu by such person, whether b.for. after the m '[1 OF commencement of this Act, for a consideration, or by any means, wholly or partly trac'able to rny property falling under item (A), or the income or eariings tierefrom; Explanation (1):If the value of illegally acquired property increases after it was acquired' or if a different property or asset is acquired or created out of Q f 1:) 1' by transfer of the all value other OF shall be and d as illeg:lly acquired property. If e of the property diminishes after if is acquired, the person concerned sha11 be 1iab1e to make good the diminution va1ue.

Exp1anation (2):I11ega11y acquired property includes property acquired or he1d by, or in possessi-n of, a person to whom this Act eppiies, outside the territory of India.

(d) "pubiic servant" means a person hoiding or who has heid an office or post in the Centre} Gov rnment or III Union Territory or in anv stttutory corporation, agenuy or company subject to the contro of the Government or \' India or financed wholiy or part1y by it and she}? inc1ude "

office of a rinister, or is or has been 5 Member QF Dar}iament, nr 15 hgidiag nr Hap: he-11]' aiTy' «who-F f_ycj1I'it.'iv:.Egi Cir'-r'iu:.o?_a 'in the Centrti Government, or in the government or administration of a Union To-v'jr"I'ti'n['_\/;

.

(ei "prescrioej" means prescriged by ruies made under I \f) "person" inc1udes a pub1ic servant within the meaning of ciause (c) and his/her re1ative and/or associate referred to in Section 2. t''\ O u \.d "property" inciudes cash, jeweiiery or any .. C I o. value and any interest in property movabie or III artici immovab1e'

(h) "trust" inc1udes any other 1ega1 obiigation. 3 (2) Any reference in this Act to any Iaw which is not in force in any area sha11, in relation to that are:, be construed as a reference to she corres-onoing iaw, if any, in force in that are:.

(3) Any reference in this Act to :ny officercn authority shn11, in re1ation to any area in whiri there is no officer or authority with the srne designrtion, J9 construed as a reference to such officer or authority as may be specified by the Central Government or by notification in the Officiai Gazette.

Section 4' 9Fﬁh1b1t1Dﬁ of hoidirg ii1egf1iy rcouired I:I"(:ll'l€!.i"I:_.'\I' (1) As from the commencemens of this Act, it shali not be 1awfu1 for any person to whom this Act appiies to hoid any i11ega11y acquired property either by himself or through any other person on his behaif. (2) where any person hoids any i11ega11y acquired property in contravention of the provisions of sup--section (1) such property shaii be 1iab1e to be forfeited to the Centrai Government in accordance with the provisions of this Act.

(3) Notwithstanding anything contained in sub-section & (2), a person ho1ding or in possession of iiiegaiiy acquired property in contravention of the provisions of III ) nhaii, on conviction by a criminai ccJrt, o be punished with imprisonment which sha11 not he iess thfﬁ one year but whizh may extend to seven years. In any such trial, the provisions contained in section 20 of the P'evention tf Cﬁrruption Act, 1888 sha11 app y, Section 5: Competeno Authority (1) The Centra1 Vigiiance Commissioner appointed under Section 3 of Ordinance No. 15 of 1998 (as rmehded by Ordinance No. 18 of 1998) sha11 be the competent authority b 'J exercise the powers and perform the functions of the competent authority under this Act. (2) The Centra1 Vigiiance Commissioner sha11 be L.L entit1e« to deiegate his powers and functions to the ol III II I

--«| C:

E III Vigi1ance Comm' " 'u appointed under section 3 of Ordinance No.15 of 1998 (as amended by Ordinance No. 18 of 1938) in respect of such pub1ic servants or cases or class or ciasses of pupiic servants or cases, as the case may be, as may be specified by him. On such deiegation, such vigi1ance Commissioners shail exercise all the powers, and perform a11 the functions of the competen L'?

authority under this Act in respect of the pupiic G servrntz or cases or the niass or c1asses of pupiic III I'?

at .-s as may have been specifi d by r\--A.-_1 \I-..-'|._--_ M1<j-- __-_--_ '.'_'l"_' C1! V '9! 'r_1IN_1*:' '_'_"l'!I 1 '_'> "JHEI . Section 6: Power to Gail For Information (ii If the competent autiority his reason to beiieve that any person is in possession of or ho1ding i11ega11y acquired properties, whether within India or abroav, it mav .5»;-;r\_/9 a_ 'p31; i «:9 li mg'. .:ur.h rut-r.~:r»n 'I".:'n r1i.~:r.'ir».~:.:- hv wav J W - '-'- I'' -~'' -- --'--~---I '4 of an affidavit, a true, fu11 and up--to-date iist of pro-erties held by him or in his possession and those .u oy ui in possession n The competent authority may after making such enquiry as L '--

u_.r A6 has} In thins fit, take such action on KJ information so furnished and the other materiai, if any, gathered by it inciuding the action contempiated by Section I. Exp1anation: The death of the pubiic servant or the person to whom this Act applies, whether before the issuance of a notice under this section or under sectirn 7 or any otier provision of this Act or during the pendency of any proceedings under this Act shaii not prevent the initiation or continuation of the proceedings under this Act and aii or any procee-ings unde; this A«t

-an be initiated or continued againss the reiatives or associates of tie pubiic servant or against the iegri re,resentatives of the person to whom this Act appiies, :s the case may be.

(2) Anv person furnishing faise information under «uh-section (1) and any person refusing to furnish information caiied For under sub-section (1) shall on uuuviction by a -zuminai court, be iiabie to be punished my imprisonment nu either description for a term which may extend to three years or fine or both. (3) Notwithstanding cnything containe- in the Criminai Procedure Code 1373, the offence under sub-section (2) shali be tried as a summary case and the procedure prescribed in Chapter XXI of the said Code (except sub--section (2) of section 262) sha11 be appiicapie thereto.

Section 7: Notice of Forfeiture (1) If, having regard to the value of the properties possessed or held, whether within the territory of India D' '<2 I:

-ny person to whom thi: Act appiies either by himseif or through any other person on his in \ pehaif, his known sources of income, earnings or assets, 9 and any other information or materiai avaiiabie to it as a result of action taken under section 6, i7, is nv 19 or otherwise, the competent authority has reason to peiieve fthe reasons for such peiief tn he recorded in writing) that aii or any of such properties are iliegaiiy acquire- may secve a not upon him within such time as mry be specified in the _-A. notice which shaii not be ordinarily iess 'nan thirty

-ssets, out of which or by means of which he has acquired reievant information and particu1ars, and to show cause why aii or any of such properties, as the case may be, ~'_1i'u:n|_l 'u uj rug» tie ujru 'lar.-uj tn ho 111+;-ga11y nrqni red 5_ol't'I"_Io:-'v"I:.'|o§~'_% Eu'u'1 ft'n'fo=_-'i'I:,E-c_ I_l| t.I"IE- CE-i'Ii_',[',_71i GQvEt'v'|"m§I'yt. Ihn'iev'

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£2)' ' Where a notice under sub--section_ (1) to any person specifies any property as being he1d on behalf of such person by any other person, a copy of the notice shaii aiso be served upon such other person. z'\

3)(a) Simuitaneousiy with the issuance of the notice under sub-section (1) or at any time thereafter, the Competent Authority ray attach aii tie properties genera11y, or any of the properties specified in the notice, heid by or in possession of the person to whom the notice under sub--section (1) is issued. Such attachment shrii be effective tiii the passing of the final orders by the Competent Authority, uniess vacated hy the Competent Authority erriier _w.. __ _I-_1-1 _ _... _.__-..¢.- -... -.- --_' __A.... ._...'.__A. .51--

gggU:g yuan; gigg Upgrdbe Q) ;n :nJuu;5iUn dgggngb Lug pug; 3.3;; rogngtrairuing hi". mrm; L.rnn§ferring (I! «jig-31 ing w'I ti'. J.l... -;.¢._._l-...1 .........A___... .. ,. -___.._ _.._-_ ...:_- J..l-- guy _LLggngu pIQp§fL|e§ nu anv ugnuei, gxggpf Huger Lug An order under ciause (a) can aiso be directed to any person or bank or any other institution orgthisation, hoiding properties for and on behaif of the pergon t0 wnum the ﬁﬂtiﬁe uhdef §hJ--§eCt1Qﬂ (1: 15 Hf H55 -40- person, tie bank, the 'institution, authority or organisation sha11 hoid ail the properties of the person to whom the iotice under sub-section (1) is issued or the specified properties, as the case may be. subject to the orders Jf the Competent Autiority and sha11 not part with f those properties e cept under the orders of the Competen Authority.

(4)(a) Where any claim is preferred to or any obiection .a_, -. V--

is made to the attachment of any property under sub-section (3) on the ground that such property is no. J iirbie to such attachment, the competent authority shaii proceed to investigate the claim or o iection Provided that no such investigation shaii be made where the competent authority considers that the claim or ot'ection was designediy or unnecessarily deiryed. xbi The ciaimant nr objector must adduce evidence to show that the property attached is not iirpie to be forfeitet under the provisions of this Act.

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(d) Wiere a claim or objection is prefer*ed, the party against whom the order is made, may institute a suit in a Civii Court to estab1ish the right which he ciaims to the said property but subject to the result of , if any, the order of the coﬁpet an nt authority sha11 be conciusive.

S-EH21-1.'CIi'! 8: r':Cvt'fE-1't|_H'-E' Of property" in certairg cases

- 'i (1) The competent authority may, after considering

4. the explanation, if any, to the show-cause notice issued under cection 7 and the materiris avaiirpie Jefu'e it and after giving to the _erson affectec (and in n case where the person affected hoids any proper-y specified in the notice through any other person, to such other person riso) a reasonapie opportunity of being herrd nv wider, record A finding whether a11 or any of the properties in question are iiiegaiiy acquired properties. (2) Where the competent authority is satisfied that some of the properties referrea to in the show--cause notice are iilegaiiy acquired properties JUt is not adie LU identify specificaiiy SULH properties, then, it shai1 JE 1awfu1 uur the competen. authority tn specify the properties, which, to the best of its judgment, are i11egaliy acquired properties and record a finding -42- {3} Where the competent authority records a finding under this Section to the effect that any property is iiiegaiiy acqui'ed property, it sha11 dec1are that such property sha11, subject to provisions of this Act stand forfeited to the Centra1 Government free from ali €'HI'.'I'.ll'l1t|!'v'."'.|'IC-'3'-*3' . (4) where any shares in a company stand forfeited to the Central Government under this Act then the company, shail, notwithstanding anything contained in the 6 Companies Act, 1956, or the crticies o association of the company, forthwith register the Central Government as the trrnsferee of such shares. Section 9: Burden of roof In anv proceedings under this Act, the burden ~- proving that any property specified in the notice served under Section 7 is not iiiegaily acquired property shail be on the pe'son affected.

section 10 Fine in Iieu of Forfeiture (1) Where the competent authority makes a declaration that any property stands forfeited to the Centre? ﬁnvernment under section 8 and it is a case where the sonrre nu oniy a part, being 1ess thrn one--ha1f, of the Ina F-

inoome, earnings or assets with which such property was aoouired has not been proved to the satisfaction of the oompetent authority, it sha11 make an order giving an option to the person affected to pay, in 1ieu of forfeiture, a fine equa1 to one and one-fifth times sf'?

2-' at-

value of such part.

9 Expianationz For the purposes of this sub-section, the 'I vaaue of any part of income, earnings or ass t' with it:

III which any property was been acquired, sha11_be - % (a\ in the case of any part of income or errnings, the amouit H! surn part of income or earnings;

(b) in the case of any part of assets, the proportionate part nu the fuii vaine of the consideration »or the aoouisition of such assets;

(2) Before mrking an order imposing a fine under sup--seotion (1), the person affected shaii be given a reasonable opportunity of being heard. -44- (3) where the person affected pays the fine due under sHh--section (1), within such time as may be a11owed in that U eha1f, the competent authority may, by order, revoke the dec1aration of forfeiture under section 8 and thereupon such property sha11 stand re1eased.

.ection 11: Procedure in 'eiation b In the case of any person referred to in c1ause i

-\ -. . ....-... .'-.- - ._ ___ ' -_ -

-vi; Uf Expiundtlun 2 to sub-§cut10h (2) cf Sectiuﬁ 2, 15 :nd tateriris avriiroie LN it, has rerson to beiieve (the reasons For such be1ief to he recorded in writing) that any property heid IH trust is iiiegaiiy acquired !j§'c:n'l_'_yo§-:v'n'_.'y', Fnay 56-Fvo-3 Ev I'ujt'§C:|-3 u_gl:u_I_Ig 'I'3'Io§- E1_|_ltht:)r' Cvf t'v'go'_-'- trust nv, as the case nay J9, the contributor n- the asset; on. nf Qt hv meang of wh1«h suuh property was rcouired hv the trust and the trustees, cc1:ina upon them within such time as may be specified in the no-ice whirh sh_.- not ordinari1y he 1ess than thirty days, tn exp1ain the source of the maney or other assets out of or by means of which such property was acquired or, as the case nay he, she source of the money or other assets which were contributed to the trust for acquiring such property and thereupon such notice shali J9 deemec to be a notice served under section 7 and all the other provisions of this Ant sha1T app1y accordingly; Explanation: For the purposes of this section "illegally acquired property" in relation to any property held in trust, includes --

--h '-1 any property which if it had continued to be held by the author of the trust or the contributor of such property to .he trust would iave been r'|"

illegally aoqui'ed property in relation to such author or contributor;

4 3 , Q

(ii) any p'operty acquired by the trust ~out of any contributions made by Cny person which would have seen illegally acquired property in relation to such person had such person acouire_ such property out of such contributions. Secuion 12: Ceruain transfers to be null and void or under section 11, any property referred to in the said notice is transferred by any mode whatsoever such transfer shall, for the purposes of the proceedings under this Act, be igno'ed and if such property is subsequently Forfeited to the Central Government under section 8, then, the tr:nsfer of such property shall be deemed to be null and void.

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secti n 13: Appeai to the High Court (1) An appea1- shaii 1ie to the High Court within whose territoriai jurisdiction the competent authority is Iocated against an order passed under Section 8, 10 or

11. (2) The appeai under sub-seotion (1) shaii be heard by a Division Bench, as may be designated by the Chief Justice of the High Court.

1- (3) The appeai shail be preferred within 45 days of the date on which the order appealed against is served rppeai preferred beyond 45 days in case the apdeiiant sat sfies that there was sufficient cause For not i preferring the appeai within the period drescribed. No notice issued or served, no deciaration made and no or_er passed, under this Act shcii be deemed to be invaiid by reason of any error in the description of the property or person mentioned therein 1- such property Mr person is identifiabie from the description so mentioned -47- Section 15: Bar of jurisdiction No order passed or deciaration made under this Act shaii be appeaiable except as provided therein and io 13! Civil Court sha11 have jurisdiction in respect of n K matter which the High Court or any competent authority is un empowered by or under thi. Act to determine, and no injunction sha11 be granted by any Court or other authority in respect of any action taken or to be taken i V in pursuance of any power conferred by or under this Act. 9 Sec 1; 11:11': '.6 ('nnipetent aI_gthﬁ r 1 t, y tn have pmuje rs of I: "g V 'I 1 (_''_.(__)i_; F?"

(1) The rompetent authority sha11 have a1i the powers u. the civi» court whiie trying a suit under the Code of Pivii Pvn«edure 1908, in respect of the foilowing matters, nameiy:--

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of dULLm&ﬂt5, (Q) receiving evidenbe nﬁ aufidavitg;

(d) reouisitioning any pubiic record or copy thereof from any court or office-

,....

O -48- issuing commissions for examination of witnesses or documents;

(f) any other matter which may be prescribed. (2) Tie competent authority sha11 be deemed to be a civi1 court ftr the purposes of section 195 and Chapter XXVI of the Code if Crimina1 Procedure, 1873 and every proceeding before the competent authority shali be deemed to be a judiciai proceeding within the meaning of sections 193 and 228 and for the purposes of section 196 on the Indirn Penri Code. Y 6 cection 17: Tnformation to competent authtrity (1) Notwithstrnding anything contained in any other iaw, the competent authority she11 have power to require rny officer or autrJri_y of the Centra1 Government or a State Government or a 1oca1 authority or a Bank a organisation or any individua1 to furnish information in reietion to such oersons, points or matters as in the authority reievant to, the purposes of thi I [I ;.

I":

rt' 71 1

-I furnish one information so ca11ed for or

51. 32-1 ti':

be puni lﬂ lI| for a term which may extend to three

-49..

(2) Notwithstanding. anything contained in the Criminal Procedure Code, 1973, the offence under sub-section (1) sha1i be tried as a summary case and the procedure prescribed in chapter XXI of the said Code (except sub-section (2) of section 262) sha11 be appiicable thereto.

\3) Any officer of the Income-tax Department, the W 'I :79' 3 E E :1 '3 Customs Department or the Centre} Excise Dep ' any officer of enforcement appointed under; the Foreign .A....'-._ I at.ou Act, 1973, may furnish era moto any Exchange Regu information avaiiaple with him to the cotpeient authority if in the opinion of the officer such information wiii pe usefui LO the rompetent authority for the purposes of this Act, Section 18 Fiiing of Statement we assets=- (1) Every Member o Pariiatent shaii fiie a true rnd fuii statement of the prepergies he}; by hin, whether in his nwn name H1 in the name uf his reiatives or his associates as on the 31st March ma every year 5g«h staterent shaii be fiied on or before the 30th June of that yerr. The statements tn\ r- -_ I..'I-_ _-_ _.a. .. I__.1-- --_ -A. _,1-_- 1'7 |\£'| CHJIII l(_ ':0-_'V Vt_'Illl_.' l|(_l_, LH:'Il_l_VIglI|LJ| I_,(_ l_.I¢1'_n'_s _. 1: _'__L -- __-.. ..l____ - -_.- _.t

1)! LV I)! all I-ﬁll] I Va |O;'lI|_ (_d_t§a( I)!' M(VI(__)'=l-' ld|)f|lj |1:.I(_I(|'_\ I I properties heid by him, whether in his own name or in the name of his re1atives or his associates, shaii fiie such ient, as on 31st March of each year, on or hefore the 30th June of that year. Such statement shali be fiied with the head of his department, undertaking or organisation, or such authority as may be specified. (3) Tie Competent Authority shali be entitied to summon the statement fi1ed under sub--section (1) or (2) or under the Centrai Civii Services (Conduct) Ruies, 1984 or any other corresponding ruies, and tahe such action & thereon as may be caiied for under the provisions of this Acf.

Section 19: Certain officers to assist competent For the purposes of any proceedings under this Act, the foiiowing are hereby empowered and required to assist the cchpetent authority name1y:--

ia) officers Hi the Custtms Department; (4) officers of the Jentral Excise Department;

(c) officers of the Income-tax Department;

(d) officers of enforcement appointed under the Foreign Exchange Reguiation Att, 1373;

(e) officers of police, if) such other officers of the Centrri or State Government as are specified by the Centrai Government in this behalf by notification in the Officia1 Gazette.

Sectitn 20 Power of competent authority to require certain officers to exercise cert:in powers (1) For the purposes of any proceedings under this Act or the initiation of any such proceedings, the a competent authority shaii have power to cause to be t conducted any inquiry, investigation, search and seizure or survey in respect of any person, piace, p'operty, assets, documents, books of accounts or any other reievant matters.

(2) For the purposes referred to in sup-sec-ion' (1) the competent authority may, having 'egard to the nature of the inquiry, investigation or survey officer of the Income-tax Deqartment to conduct or cause I to be conducted such inquiry, investigation, search aw seizure or survey.

(3) Any officer of the Income-tax Department who is conducting or is causing to be conducted any inquiry , search and seizure or survey required to

-52.-

power (inoiuding the power to authorise the_ pxercise of any power) which may be exercised by him for any purpose under the Inoome-tax Act, 1961, and the provisions of the said Aot shaii, so far as may be, app1y aooordingiy. Section 21: Power to take possession (1) where any property has been deoiared to be forfeited to the Centrai Government under this Art or ! where the person affected has failed to pay the fine due the compeoent authority may order the person affected as well as any other person who may be in possession of the property to sur'ender or deiiyer possession thereof to the competent authority or to any person duiy authorised by it in this pehaif within ; thirty dry: of the service of r'\ I\) '-1 9-4 "9':

1| _ny p II:

III r.

LH refuses or faiis to comp1y with an order made under sub-section (1) may take possession of the property and may .or that purvose use such force as way be necessary. (3) Notwithstanding anything contained in sub--section (2), the competent ruthﬁrity may, for the purpose of takina oossessioi of any Wrovertv referred to in

- . , L.- -.--, .- -- --

sub--section (1), requisition the services of any police

--officer to assist the competent authority and it shali be the duty of said officer to compiy with such requisition. Section 22: Rectification of mistakes: with a view to rectifying any mistakes apparent from record, th III In 9 ..E\ 3 ~< competent authority or the High Court, as the .a be, may amend any order made by it within a period of one year from the date of the order:

it:

if?

9::

Provided that if any such amendment is iik Ev' A' affect any person prejudiciaiiy, it shaii not be mad III without giving to such person a reasonabie opportunity cf Section 23 Findings under other iaws not oonciusive s..».:_i;g.t;--_e.-:--.;:1.iZ_v1e-s. -.~..«_'vi -1e. 2:- t'r.i.:i__.s_»':_:.t No finding of any officer or authority under 11' ;

other 1aw shaii be conciusive for the purposes of any proceedings under this Act. Section 24' Service of notices and orders' Auv notice or order issued or made under this Act shali be

-54..

(a) by tendering the notice or order or sending it by registered post to the person for whom it i III intended or to his agent;

(b) if the notice or order cannot be served in the.

manner provided in ciause (a), by affixing it on a conspicuous piace in the property in reiation to which the iotice or order is issued or made or on such conspicuous part of the premises in which the person for whom it is intended is known to have iast resided or carried on business or 'iv i pe'sona11y worked for gain.

Section 25 Protection of action taken in good Faith No suit prosecution or other proceedings shaii iie rgainst the Central Government or any officer of the :, in good faith in pursuance of this Act, or the ruies made thereunder Section 26' Punishment for giving faise information

-1) Whoever, with intent to c:use injury to or r_1o;-farm;-, fﬁy po=_-r~3«:»rg, gives any iinfu:»_rm_ati«jni In in-mgflaiuiig. to the Competent Authority wnirn he either knows nv has for truth, sha11 be punished with imprisonment of either description For a term which may extend to three years or fine or both.

(2) Notwithstanding anything in the Criminal Procedure Code, 1973, the offence under sub-section (ii ;

shaii be tried as a summary sase and the procedure prescribed in ciapter XXI of tie said Code (except %.

6. Section 27 Act to havp Qvepriding effect Thu provisions of this Act shaii have effect notwithstrnding anything inconsistent therewith contained in any or other iaw for the tiﬁe being in force. So§Ct'u:n'I 28' P'y'(:)\_/"i.\'_%'|.I:)i'g.S. «jar the /54:1" D'u'u to agjngniy tn Nothing contained in th1S Ait shaii appiv in reiation to rny property held by a trust or an institution created or estabiished who11y for puo1ic re1igious or charitabie purposes -- institution from a date prior to the commencement

(ii) such property is whoiiy traoeapie to any property heid by such trust or institution prior to the commencement of this Act.

Sectitn 29: Power to make ruies: The Central Government may, by notification in the Officiai Gazette, make ruies to carry out the provisions of this Act. Section 30: Act to be in addition to any other iawz The provisions of this Act sha11 he %in addition we provisions of the Prevention of Cogruption Act Prevention of Money Laundering Act. Any proceeding taken under any of the said enactments shaii not oreciude the uwiﬁéseﬁt authority under this Act from taking any action or initiating any proceedings under this Act

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The Corrupt Public Servants (Forfeiture Of Property Bill)